The Indian government has once again revised the import duty structure on gold, silver, and other precious metals, a move that is expected to make bullion imports significantly more expensive from May 13 onward. The decision comes at a time when global geopolitical tensions, particularly in the Middle East, continue to impact commodity markets and crude oil prices worldwide.
According to newly issued notifications from the Finance Ministry, higher import taxes will now apply to gold, silver, platinum, jewellery components, and even metal scrap imported into India. Industry experts believe the revised tax structure could directly push domestic bullion prices higher in the coming weeks.
The development follows recent public remarks by Narendra Modi, who reportedly urged citizens to reduce unnecessary gold purchases and limit fuel consumption amid rising international tensions and economic uncertainty.
Import Duty on Gold Increased Sharply
Under the revised structure, the government has increased the Basic Customs Duty (BCD) on gold from 5% to 10%. In addition, changes have also been made to the Agriculture Infrastructure and Development Cess (AIDC), increasing the overall tax burden on imported precious metals.
Previously, gold imports attracted:
- 5% Basic Customs Duty
- 1% AIDC
- Total effective import duty: 6%
The revised rates are expected to significantly increase the landed cost of imported bullion in India.
Interestingly, during the Union Budget 2024, the government had reduced the total import duty on gold from 15% to 6% in an effort to support trade activity and improve market demand. However, the latest revision signals a shift in policy as authorities attempt to manage rising imports and economic pressures.
Jewellery Components and Scrap Imports Also Affected
The higher duty structure will not only affect gold bars and bullion but also smaller jewellery-making components such as hooks, screws, pins, and other accessories used by manufacturers.
In addition, the government has imposed a 10% import duty on scrap material brought into India for extracting gold and silver from old metals. This move is expected to impact recycling businesses and refiners involved in recovering precious metals from industrial and jewellery waste.
UAE Gold Imports to Become Costlier
The revised tax structure will also impact gold imports coming from United Arab Emirates under concessional quota arrangements.
Previously, certain imports from the UAE enjoyed reduced import duty benefits under special trade provisions. However, with the updated rules now in effect, those imports are also expected to become more expensive.
Impact on Consumers and Jewellery Industry
Experts believe the increase in import duty could have a wide-ranging effect on consumers, traders, jewellers, and manufacturing businesses.
Possible consequences include:
- Higher gold and silver prices in the domestic market
- Increased jewellery production costs
- Rising operational expenses for industries using precious metals
- Additional pressure on bullion traders and retailers
- Impact on gold and silver recycling businesses
Since India imports a significant portion of its gold demand, any increase in customs duty directly affects retail prices across the country.
India Remains One of the World’s Largest Gold Consumers
India continues to be the world’s second-largest consumer of gold and the largest consumer of silver. Gold imports play a major role in influencing the country’s trade deficit and foreign exchange reserves.
Reports suggest that India’s gold imports during the financial year 2025 reached nearly $58–60 billion, one of the highest levels recorded so far. Analysts believe the sharp rise was largely driven by the import duty reduction announced in the 2024 Budget.
PM Modi Appeals to Citizens to Limit Gold Purchases
Prime Minister Narendra Modi recently appealed to citizens to avoid unnecessary gold purchases for the next year due to rising geopolitical tensions in the Middle East and increasing crude oil prices.
The government’s latest decision to raise import duties appears aligned with broader efforts to manage external economic pressures, reduce excessive imports, and maintain financial stability during uncertain global conditions.
